The _________ may indicate that the firm is experiencing stockouts and lost sales.
- AAverage payment period
- BInventory turnover ratio
- CAverage collection period
- DQuick ratio
Solution & Step-by-step Explanation
An exceptionally high Inventory Turnover Ratio relative to sector benchmarks indicates that inventory is moving very fast. While usually positive, an excessively high ratio can mean the business carries too little safety stock, leading to frequent stockouts, an inability to fulfill sudden customer demand, and lost sales opportunities.